DA Davidson cuts Salesforce price target to $275

On Thursday, DA Davidson analyst Gil Luria adjusted the price target for Salesforce.com (NYSE:CRM) shares, reducing it from $300.00 to $275.00, while retaining a Neutral rating for the stock. Currently trading at $307.33, InvestingPro analysis suggests the stock is slightly undervalued. The company boasts a perfect Piotroski Score of 9, indicating strong financial health. The revision follows Salesforce’s fourth-quarter fiscal year 2025 earnings, which fell short of analysts’ expectations, and the company’s initial fiscal year 2026 revenue growth forecast of 7%-8%. This projection includes a 0.5% impact from foreign exchange headwinds and represents a decline from the 9% growth rate in fiscal year 2025.

Luria’s commentary highlighted that despite Salesforce’s efforts to promote Agentforce and data cloud adoption, the management anticipates only modest contributions to the fiscal year 2026 performance. With impressive gross profit margins of 77% and current revenue of $37.2 billion, the company maintains strong operational efficiency. This outlook aligns with DA Davidson’s previous assessments. The anticipated slowdown in revenue growth is attributed to challenges in the professional service and marketing + commerce cloud segments, which are expected to counterbalance the positive momentum from the data cloud division and the growing benefits of artificial intelligence.

The lowered price target is based on a 22 times price-to-earnings (P/E) multiple for fiscal year 2027. Luria’s stance remains neutral, suggesting that the analyst sees neither significant upside nor downside potential for Salesforce stock at this time.

Salesforce’s performance and future outlook are impacted by a mix of factors, including currency fluctuations and sector-specific headwinds. The company’s strategic initiatives, such as the introduction of new cloud services and AI enhancements, aim to drive growth amidst these challenges. However, the tempered expectations for fiscal year 2026 reflect the realities of a competitive and evolving market.

Investors and market watchers will likely continue to monitor Salesforce’s progress in expanding its product offerings and navigating the current economic landscape, as reflected in the company’s financial guidance and the analysts’ adjusted valuation metrics. InvestingPro data reveals the company’s strong financial position with moderate debt levels and robust cash flows. For deeper insights into Salesforce’s valuation and growth prospects, including 12 additional exclusive ProTips and comprehensive financial analysis, subscribers can access the full Pro Research Report.

In other recent news, Salesforce.com reported fourth-quarter results that aligned with revenue expectations and exceeded earnings per share (EPS) estimates, posting an EPS of $2.78 against a projection of $2.61. The company also experienced robust growth in its Calculated Remaining Performance Obligation (CRPO), despite a $200 million foreign exchange headwind. Analysts at Evercore ISI maintain an Outperform rating with a $420 target, noting the potential for revenue acceleration later in the fiscal year. Meanwhile, Goldman Sachs reaffirmed a Buy rating with a $400 target, expressing optimism about Salesforce’s growth trajectory, particularly in the second half of fiscal year 2026. JMP Securities adjusted its price target for Salesforce to $430 from $450, citing mixed third-quarter earnings that included a revenue miss, while Stifel reduced its target to $375 from $425, maintaining a Buy rating and highlighting Salesforce’s strong position in agentic AI. RBC Capital continues to hold a $420 target, acknowledging the company’s subscription growth and operating margin guidance that met expectations. Despite some challenges, such as foreign exchange impacts and a revenue miss, these developments underscore ongoing confidence in Salesforce’s strategic initiatives and growth potential.

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